BEIJING- China and Russia will expand local currency settlements for bilateral trade, announced Chinese Premier Wen Jiabao and his Russian counterpart Vladimir Putin Tuesday, one day after the yuan started trading against Russian rouble on the Chinese interbank market.

Zhang said direct trade between the countries began long before at China's border goods distributing centers. Local traders had largely accepted the Chinese yuan for bilateral trades because of their confidence in its stability and China's strong economy.

It was the first time China has ever officially cooperated with a big power on local currency settlement.

St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

After 500 years of Western predominance, Niall Ferguson argues, the world is tilting back to the East.

By NIALL FERGUSON

"We are the masters now." I wonder if President Barack Obama saw those words in the thought bubble over the head of his Chinese counterpart, Hu Jintao, at the G20 summit in Seoul last week. If the president was hoping for change he could believe in—in China's currency policy, that is—all he got was small change. Maybe Treasury Secretary Timothy Geithner also heard "We are the masters now" as the Chinese shot down his proposal for capping imbalances in global current accounts. Federal Reserve Chairman Ben Bernanke got the same treatment when he announced a new round of "quantitative easing" to try to jump start the U.S. economy, a move described by one leading Chinese commentator as "uncontrolled" and "irresponsible."

Kaixin OpEd – This is what interests ‘ western’ Kaixin – Graeme, the re-balancing of the world after 500 years.

500 years - That is the key point in Kaixin's opinion. Not 10, not 30, 500. There is much history to be understood in that time period.

It is fascinating to watch. It is made more fascinating for ‘ western’ Kaixin because he is married to Xiaosui, a highly educated woman from China who was born into the heart of the Cultural Revolution and has lived through all the changes in China from 1979.

It gives a unique insight into that complex dragon, China.

Kaixin respects very few economists, as his OpEd’s would indicate. He does respect Niall Ferguson.

In remarks prepared for delivery in Frankfurt Friday morning, and released by the Federal Reserve Thursday night in Washington, Fed Chairman Ben Bernanke mounted his most detailed defense against charges that the Fed is deliberately cheapening the dollar by printing $600 billion to buy U.S. Treasurys and tried to point the finger at China’s reluctance to let its currency rise faster.

BEIJING -- The reform of China's exchange rate regime for its currency, the renminbi (RMB), has to proceed with caution to avoid a "big shock" to the world economy, foreign experts said Monday.

"There is a perfectly good reason for China to sustain the appreciation of the RMB not making a big shock," Martin Wolf, chief economics commentator at the Financial Times newspaper, told Xinhua.

"Reforming the exchange rate regime is not a policy that can be taken separately. I accept there is a transitional problem and it has to be seen as a multi-year policy," Wolf said on the sidelines of the third annual Globalization and Economic Policy Center (GEP) conference in Ningbo, Zhejiang province.

MACAO - A senior central bank official called on Saturday for reducing reliance on international reserve currencies in trade settlements, citing risks posed by their instability.

"We should enhance cooperation and reduce dependence on international reserve currencies," Jin Zhongxia, deputy director-general of the international department at the People's Bank of China, said at a forum attended by Portuguese-speaking officials and business people.

"The existing international monetary system, centered on a small number of reserve currencies, is quite unstable," he told participants at the third Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries, which concluded on Sunday.

An animated rap video from a Taiwanese group sums up the Seoul Group of 20 meeting better than the weasel words of any official statement. To wit: the rest of the bloc takes a dim view of Washington flooding the world financial system with dollars it doesn’t have

Trust Andy Xie to have some strong words to put a damper on the yuan party.

The notorious China bear and independent economist said the internationalization of the yuan was like a “striptrease show that can go on forever.” He said China’s political system can’t live with full convertibility of its currency because it isn’t based on “rule of law.”

SEOUL, South Korea - Leaders of 20 major economies on Friday refused to endorse a US push to get China to let its currency rise, keeping alive a dispute that has raised the specter of a global trade war.

At the end of their two-day summit, the leaders of the Group of 20 rich and developing economies -- including US President Barack Obama and Chinese President Hu Jintao -- issued a statement that only said they agreed to refrain from "competitive devaluation" of currencies.

Having long chafed at US criticism of its currency policy, China has turned the tables with its own denunciations after the US Federal Reserve instituted a $US600 billion attempt to reflate the US economy.

Backed by Germany, Brazil and other G20 powers, China accuses the US of forcing the dollar down to trade its way back to prosperity, and says this could trigger a 1930s-style trade war if other countries respond in kind.

SHANGHAI - The Chinese yuan will remain attractive internationally due to the nation's rapid economic expansion and gradual opening-up of its capital account, officials and industry experts said.

"The internationalization of renminbi is likely to pick up," Il Houng Lee, the International Monetary Fund's senior resident representative in China, said on Thursday at a financial conference in Shanghai.

The level of the yuan on the global stage in the next decade may become as high as the Japanese yen was over the past 20 years, Lee said.

The Japanese currency is widely used as a reserve currency after the US dollar and the euro.

A possible route for the currency's internationalization will initially probably be through East Asia, along with the circulation of some other key Asian currencies, Lee said.

"Asia as a bloc is increasing much faster than other regions, suggesting a sizable expansion of its financial market," he said, adding that China currently has negative net export to the Associations of Southeast Asian Nations, Japan and South Korea, which could help promote the yuan in the region.

China has stepped up the liberalization of the yuan since December 2008, when it began to sign currency swap agreements with several countries and regions, including South Korea, Indonesia and Argentina.

President Obama's letter came amid finger-pointing that has threatened to overwhelm the meeting of world leaders. Mr. Obama arrived in Seoul on Wednesday night for a series of critical meetings Thursday, including with German Chancellor Angela Merkel, whose government has led the criticism of U.S. dollar policy, and Chinese Premier Hu Jintao, who has resisted the U.S. president's push on China's currency.

NEW DELHI—U.S. Treasury Secretary Timothy Geithner said Monday he is "very confident" world leaders, including those from China, will later this week agree on a global economic rebalancing framework that may include early warning indicators on when current accounts are excessive.

KYOTO, Japan—As he heads to a crucial G-20 summit in South Korea to cajole exporting countries into limiting their current-account surpluses, U.S. Treasury Secretary Timothy Geithner encountered some headwind at a weekend meeting of APEC finance ministers who said that Washington's monetary policy is flooding their economies with too much cash.

SEOUL—South Korean President Lee Myung-bak said he was counting on "peer pressure," not enforceable rules, to police any currency deal made among leaders at next week's summit of the Group of 20 nations.

He also promoted a plan to largely eliminate tariffs and quotas on exports from the world's poorest countries.

Rising demand for the Chinese yuan and yuan-based products in Hong Kong has gotten a fair amount of play in this column. Now, all that yuan buzz has spurred debate as to whether Hong Kong might abandon its 27-year peg to the U.S. dollar.

Sprint Nextel Corp. is excluding Chinese telecommunications-equipment makers Huawei Technologies Ltd. and ZTE Corp. from a contract worth billions of dollars largely because of national security concerns in Washington, according to people familiar with the matter.

HONG KONG—Officials in Asia warned of possible moves to brace their economies against an expected flood of money into the region stemming from the Federal Reserve's latest plan to rekindle growth in the U.S.

SHANGHAI—China's securities regulator said it approved an application from Hong Kong's de facto central bank for a Qualified Foreign Institutional Investor license, which would allow the territory to diversify its foreign-exchange reserves into the Chinese yuan.

WASHINGTON - The United States said on Monday it does not foresee China bowing to pressure over its yuan currency during a Group of 20 summit in Seoul, playing down expectations for major progress on global economic imbalances.

A US official said they do not expect the currency issue to be solved once and for all in Seoul. "This is part of an ongoing effort," Michael Froman, White House deputy national security adviser, told reporters.

Set in Zanzibar in 1910, it is the story of two people from different worlds falling in love. Susan immerses herself in Zanzibar. Asim falls in love with this woman from the nation that killed his wife. Susan is a spy. Asim is the chief advisor to the Sultan of Zanzibar. Germany and France are holding secret negotiations to form a Pan European alliance, which would isolate Britain and destroy her power. Susan and Asim are caught up in all this and their love is finally dashed on the cold, hard reality of international high politics.

The ancient dhow stirred in the soft morning breeze. Like a sleepy lion, it began to move through the water, snuffling about the other boats on the harbour; some scurrying, some at anchor, some darting before a brief gust of wind. The lateen sails a bustling panorama of blood-red and sun-bleached white.

Aft, the woman's eyes searched the skyline, drinking in the architecture of Stone Town, the heart of Zanzibar; its jagged, cluttered silhouette so familiar, so much a part of her soul.

Abruptly, her eyes ceased their restless searching, jagged by an invisible hook, transfixed by the grand buildings on the northern shore, Beit-al-Ajaib, the House of Wonders, Palace to the great Sultan of Zanzibar. The distinctive architecture captured in the tropical light: coconut white outlined by contrasting shadow plays of pepper black.

A smile, ever so slight, started to play on the edge of her mouth then disappeared. A memory that should have been fond instantly turned to sharp unbearable pain. Her eyes hardened and moved on.

Without warning the captain threw the rudder over. Stumbling, the woman barked her shin on a wooden box, a rough-hewn coffin. She recoiled, knocking over an untidy stack of cane baskets. Imprisoned in the baskets, rusty cockerels, their scruffy heads straining through the latticework, snapped at her, cried out to her; their raucous din overwhelming her, drowning her.

Dimly, through the fog of noise, the strident swearing of the sailors in Kiswahili seeped into her conscious. Understanding, she smiled mirthlessly.

The coffin had been carelessly stowed, a chore, rather than a labour of respect or love.

London 1910

“Hello, who are you? I am Oliver, is Edward at home?”

The words were spoken by a tall, impeccably dressed young man as he rushed into Edward’s flat shaking off surplus water and calling for whisky while shoving his umbrella into a stand. It was a blustery, grey, bitterly cold February afternoon in the heart of London. He brushed a curl of soft auburn hair from his forehead and smiled charmingly.

Susan laughed, her hazel eyes dancing with the exhilaration of the new. “Yes, he is having a bath. I think he is trying to get warm. I’m Susan, Susan Carey, his sister.”

“Ahhh yes, from Australia. How do you do?” said Sir Oliver, smiling broadly and offering his hand. He noticed the laughter in her eyes, and the depth, particularly the depth, intensified by jade flecks that made them striking and alluring. “So, you have arrived, good trip I trust.”

“I am very well thank you, and yes, it was a good trip,” replied Susan.

He laughed and glanced at the sitting room, “whisky?”

“Oh, I’m sorry, please come in…….. that was silly of me, after all, it is your flat.”

Oliver smiled and gestured for Susan to lead the way. He followed her into the room, and after helping himself to a generous portion of whisky, walked over to the fire.

Shortly after, Edward, wrapped in a huge ruby-coloured dressing gown and wiping soap from his ear strode into the room. He was of similar age to Oliver, late twenties, well built, if slightly podgy, with dark auburn hair and a full moustache. Susan looked up and smiled to herself, she could see now where he had picked up some of his new mannerisms.

“Thought I could hear voices. I see you two have met, no need for introductions then.”

As he was speaking, Edward walked to the side table and grabbed a whisky decanter by the neck. He glanced at Oliver who nodded. A long finger snaked into one of the tumblers followed by the distinctive clink of crystal. He swept the decanter off the table and carried it to where Oliver was sitting. After pouring the whisky, he sank into a lounge chair and sipped from his glass, enjoying the warm glow as it spread through his body.

Suddenly he sat up exclaiming, “Sorry sis, would you like something to drink?”

“Kind of you to remember, but no thank you, and yes, Oliver has already inquired.”

Edward nodded and sank back into his lounge chair.

They chatted, tentatively at first, getting to know one another. Edward had not seen Susan for two years and was unsure how his sister would take his new relationship. Oliver was intrigued by Susan. An attractive, self-assured young lady of high intelligence with a degree was a rare find. And, as fate would have it, she was also a trained and experienced teacher. He suggested a picnic at Oxford, which was met with ready acquiescence. Arrangements were made for the following Sunday.

“I’ll see if the Rolls is available,” mused Oliver. “Must ring father, haven’t spoken to him in ages.”

Oliver, Sir Oliver Marchmaine, was an unaffected young man of intense intelligence who saw life as a great adventure to be lived to the full. He was also unyieldingly loyal to his country, England, which is why he had joined Military Intelligence on leaving Oxford.

It was 1910 and Europe was stirring. It was a time full of interest, intrigue and danger. The European chessboard was becoming increasingly complex, the moves more subtle. A time when an unexpected move or feint could have profound consequences.

Regaining her balance, the woman’s eyes were drawn, hesitantly at first, resisting back to Beit-al-Ajaib. She wondered if it was still the same. Still the same centre of power and intrigue that had been so much a part of her life all those years before; that had defined her life.

She remembered those first few moments, remembered standing in the foyer of the palace, .………… remembered the breathtakingly beautiful Persian tapestry ........

The sea breeze stirred her clothes. She smiled a little sadly, and in her mind the tapestry gently swayed. Two small apparitions ran giggling up the stairs: two small exquisitely rich burkas disappearing along the first floor landing. Childish squeals of mischief and joy left in the air.......

“Move to seaward, you accused of Allah! Move!”

Her thoughts were clawed back to the dhow, the captain crashing the tiller over to avoid another boat on the crowded harbour. The woman instinctively ducked her head to avoid the heavy boom as it swung over her, the rusty cockerels squawked their raucous indignation, their heads straining through the latticework, relentless.

The collision avoided, the dhow continued on its way. The cacophony dying down to the occasional command by the captain or the cry of a seagull.

The woman's thoughts returned to Beit-al-Ajaib

…………. laughing and giggling, girls of seven or eight. A door on the first floor slammed and all sounds of them disappeared. Silence. The woman smiled. She could see herself, a young woman, dressed plainly, unselfconsciously, her sexuality tantalisingly just out of reach, hidden beneath the thin veil of her clothing. She remembered standing alone in the foyer, looking around, perplexed. Asim came through a door to the left of the tapestry.

“Salaam.”

The woman started and looked around. Then, realising, was cold again. Alone again. Alone, rocking to and fro to the rythm of the sea. Alone, beside a rough-hewn coffin.